Trump just spent August attacking his most important appointee: Morning Brief

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Powell is his guy

On July 31, the Federal Reserve cut interest rates by 25 basis points, its first rate cut since the financial crisis. After months of prodding, the Fed finally gave President Donald Trump what he’d wanted for months — lower interest rates.

The stage appeared set for a great August for financial markets. Instead, the last full month of summer was a headache for investors.

“We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem,” Trump tweeted last Friday. Adding in a follow up tweet: “If the Fed would cut, we would have one of the biggest Stock Market increases in a long time.”

These were just two of the more than 25 tweets Trump published in August about the Federal Reserve. Almost once a day last month, Trump complained that his most important political appointee was letting him down.

For the most part, financial markets have ignored Trump’s incessant complaints about the Fed. Trump calling the Fed chair an enemy has not resulted in stock prices going up or down a lot. The market has accepted the Fed’s insistence that politics play no role in its policymaking at face value. It is better than the alternative. (And it’s why the blowback to Bill Dudley’s column last week was swift and universal.)

It is also exhausting and sort of boring to follow each complaint Trump lobs at Powell. What the president wants is for stocks to go up in a straight line. Trump thinks the Fed is what stands in the way of that, not his trade war with China. That’s the long and the short of it. Whether Trump calls Powell a bad golfer or implores the central bank to “show their stuff” doesn’t really matter.

But what I think investors should keep in mind when it comes to Trump’s attacks on Powell is that this is his guy, even if he regrets the choice. Trump could’ve nominated Janet Yellen for another term as Fed chair. Or he could’ve nominated Kevin Warsh. Or Gary Cohn. Instead he picked Powell, and he believes he has been let down.

It’s hard to imagine, however, that any of these other nominees would’ve made Trump happier. A recurring theme of Trump’s presidency is that there is always someone else to blame: The media. Paul Ryan. Jay Powell. Xi Jinping.

And so while many investors and strategists still believe that a trade deal with China “will get done,” it’s not clear why. Because an assumption that a trade deal “will get done” is really an assumption that Trump will finally be satisfied. That nothing else will stand in the way of the best economy and stock market ever. That Trump will no longer tweet things that make stocks go down. That he will no longer, in essence, be himself.

The “Trump will make a deal on trade” story is becoming the oldest pitch in the Trump era playbook for investors. But it’s also the most unrealistic. It assumes the president is someone he’s not.

Editor-at-large Brian Sozzi will talk to Marty Burger, Silverstein Properties CEO, about the state of the commercial real estate market on The First Trade this morning. Silverstein is a privately held real estate company known for acquiring the World Trade Center in New York City weeks before the 9/11 terrorist attacks.

Managing editor Sam Ro and Myles Udland will explain why this newsletter looks a little different on YFi PM, which starts at 1:00 p.m. ET and is anchored by Zack Guzman.